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Alternative Production Procedures and Operating Leverage Assume Paper Mate is planning to introduce a new executive pen that can be manufactured using either a capital-intensive
Alternative Production Procedures and Operating Leverage Assume Paper Mate is planning to introduce a new executive pen that can be manufactured using either a capital-intensive method or a labor-intensive method. The predicted manufacturing costs for each method are as follows:
Capital Intensive | Labor Intensive | |
---|---|---|
Direct materials per unit | $5.00 | $6.00 |
Direct labor per unit | $5.00 | $13.00 |
Variable manufacturing overhead per unit | $5.00 | $2.00 |
Fixed manufacturing overhead per year | $2,160,000.00 | $540,000.00 |
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